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January 12th Market Wrap-Up

Candlestick analysis allows investors to observe the obvious. The obvious is that prices move in patterns, based upon the reoccurring thought process of investors. Patterns are created by a simple factor. Investor sentiment reacts to price moves the same way time after time. This is exactly what the Japanese Rice traders illustrated when developing candlestick charts. Patterns have two strong benefits. First, it allows an investor to see which way a price move will occur with a high degree of probability. Secondly, price patterns provide excessive profitability, moving with much greater magnitude because of human nature. This high probability benefit is easily witnessed and patterns such as frypan bottom breakout's, J-hook patterns, or the combination of those patterns in what is called the classic pattern. This provides a trading platform that allows investors to not only be in the right direction at the right time, but in trades that are going to also produce very large profits.

Today's trading showed profit-taking but not any major change of investor sentiment. This is easily assessed when knowing what the nature of each candlestick signal represents. The major indexes, the Dow, the S&P 500, and the NASDAQ all formed indecisive trading formations with a close near the high end of their trading range today. Additionally, all the indexes close backup above the T-line. Simple analysis based upon these formations clearly indicate there is no dramatic selling pressure, the indexes are still in a slow steady uptrend. Having that knowledge allows investors to take advantage of the high profit pattern breakout's.


Chat session tonight at 8 PM ET with guest speaker Harry Boxer. Click here to register.


Good Investing,

The Candlestick Forum Team



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